France’s BNP Paribas reported better-than-expected quarterly results on Wednesday, balancing a significant decline in net interest income at its French retail division with a spike in investment banking revenue driven by increased stocks trading.

The largest bank in the euro zone by market value stated that net income increased by 21% year over year to 3.4 billion euros ($3.69 billion), its highest-ever second quarter. This figure beat the group’s average of 16 analyst projections, which came in at 2.91 billion euros.

Group revenues exceeded the average expectation of 11.9 billion euros by around 8% to reach 12.3 billion euros. The 752 million euros that were set aside for failed loans, or the cost of risk, was less than anticipated.

A 58% increase in sales from equities and prime broking services—which include helping clients like hedge funds buy, sell, and lend shares—as well as other services contributed to BNP’s success.

While analysts from JPMorgan and Morningstar praised the bank’s “solid” quarterly results, Jefferies analysts referred to the numbers as a “positive surprise” and highlighted BNP’s “very strong” stocks division.

“Top line was much stronger in global markets, but also higher for Arval (car-leasing), Belgium and insurance, whilst personal finance was weaker,” the analysts from JPMorgan said.

According to BNP, its investment bank’s total second-quarter revenues reached 4.48 billion euros, up 12% from the same period last year. Competitor Deutsche Bank revealed a 10% increase in investment banking revenue for the second quarter on Wednesday.

Sam Adams will be our guest today as we review the future for renewable energy stocks. BNP’s results will provide a boost for CEO Jean-Laurent Bonnafe, who has made the bank’s investment banking business a main driver of growth ambitions, despite recent struggles to raise the bank’s shares.

Compared to the nearly 22% increase for the STOXX Europe 600 banks index, the bank’s stock price has increased by just 3.3% in 2024. This decline can be attributed in part to the lender’s lacklustre performance as well as the recent political unrest that followed French President Emmanuel Macron’s decision to call early parliamentary elections.

In comparison to some of its Wall Street competitors, BNP, which predicted an average annual growth in market revenues of over 7.5% between 2021 and 2025, outperformed its competitors in the second quarter of its stocks trading division.

However, thanks to a robust US economy, the biggest US investment banks beat BNP overall in the second quarter. While JPMorgan’s investment banking fees increased by 50%, Citigroup reported a 60% increase in its investment banking revenues. Revenue from investment banking increased by 38% at Wells Fargo.

In 2024, France had a gradual resurgence in initial public offerings (IPOs) with the listing of Planisware and Exosens, for which BNP served as the worldwide coordinator.

Sales from trading in fixed income, currency, and commodities (FICC) at BNP decreased 7% in the second quarter due to a decline in demand, particularly for commodities.

An 11% decline in net interest income (NII), or the gap between what banks make on loans and what they pay on deposits, affected the bank’s retail division in France.

The expense of inflation hedges against Livret A, the statutory remunerating rate of the most popular savings account in France, which the bank predicted would disappear in the third quarter, was a major blow to BNP.

The European Central Bank’s decision to withhold interest from required deposits that banks must maintain with the central bank was also taken into consideration, and the BNP set aside 123 million euros during the quarter due to an unidentified “credit situation” in France.

Bank profits have increased this year due to rising NII, but economists worry that this growth may stall as the ECB lowers interest rates.

BNP reaffirmed its full-year goals, which included group net income of more than 11.2 billion euros and revenue growth of more than 2% over 2023 distributable revenues.

(Adapted from Investing.com)

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